Press Report : Tories attack delay to MG Rover report

Ministers were yesterday forced to deny Tory accusations that the decision to refer the collapse of MG Rover to the Serious Fraud Office (SFO) was a ruse to avoid political embarrassment over the role played by the Government in the carmaker’s demise. The political row erupted after Lord Mandelson, Business Secretary, announced that the findings of the four-year £16m inquiry into Rover would not be published, pending a decision by the SFO on whether there were grounds for prosecution.

Ken Clarke, the Shadow Business Secretary, accused Lord Mandelson of trying to kick the issue into the “long grass” until after the General Election. He attacked the “quite unacceptable” decision to refer the issue to the SFO, rather than publish the report of the Government-commissioned Companies Act investigation that was submitted to ministers last month. “The whole point is to continue to avoid publication [of the inquiry report] and avoid answering questions about the Government’s own role in this embarrassing affair,” Mr Clarke told MPs.

The Government came under intense fire when Rover collapsed in 2005 for encouraging the £10 sale of the company in 2000 to four Rover executives, known as the Phoenix Four, rather than a private equity consortium. The Phoenix Four subsequently paid themselves millions of pounds in salaries and pension benefits.

The Shadow Business Secretary yesterday questioned why ministers had selected Phoenix and why £6.5m was later spent on a loan in a doomed attempt to “keep the company alive” during the 2005 election campaign.

The whole point is to continue to avoid publication [of the inquiry report] and avoid answering questions about the Government’s own role in this embarrassing affair. Ken Clarke MP, Shadow Business Secretary

The Phoenix Four also attacked the referral. A spokesman for the MG Rover Directors said the decision was “mystifying, given that at no stage during the last four years of the government inspectors’ investigation has there been any suggestion of fraud or criminal activity of any kind.”

“Lawyers advising the Directors who have sat through all of the interviews and read every scrap of evidence have confirmed there has never been any suggestion of fraud during the investigation,” said the spokesman. “Quite understandably, people are asking why the Government don’t want to see this report published.”

But Lord Mandelson hit back, saying the issue of potential fraud was not an issue for the directors to decide. “It’s . . . for the SFO to examine the conclusions and the findings of the inquiry and to make their own judgment. It won’t take so long to do that and it’s a necessary step to take. It’s up to them to judge, not up to the so-called ‘Phoenix Four’,” he said.

Officials refused to discuss the rationale for the referral to the SFO, warning that comment on the contents of the inspectors’ report could prejudice any subsequent trial. But Government insiders said the decision to call in the SFO – whose job is to investigate suspected serious and complex fraud and corruption, usually involving more than £1m – had been taken on legal advice. Lord Mandelson has said he had an “obligation” to refer the report to the SFO, suggesting the inquiry report findings are more trenchant than mere criticism of institutions and individuals.

The SFO said yesterday it had received the report on Friday. The agency has set up a team of four people to vet the document to decide whether to launch a full investigation. The vetting process is supposed to take a maximum of 20 days, although this case may take longer because of the complexity and sensitivity of the material.

The SFO said yesterday it had received the report on Friday. The agency has set up a team of four people to vet the document to decide whether to launch a full investigation. The vetting process is supposed to take a maximum of 20 days, although this case may take longer because of the complexity and sensitivity of the material.

Any successful prosecutions that arose from the SFO referral could prove a political problem for the Tories, as their call for the report to be published would potentially hamper such actions. But a decision by the SFO not to investigate – or significant further delay – would increase the pressure on ministers over their protracted response to the Rover saga.

Probe obstacles

A probe by the Serious Fraud Office into the collapse of MG Rover could be made harder by both the time lapse and the ongoing Government inquiry into the affair, writes Michael Peel .

Criminal defence experts said events since the carmaker’s demise risked depriving investigators of vital evidence and the probe could be vulnerable to legal challenge on grounds of fairness and human rights.

Criminal defence experts said events since the carmaker’s demise risked depriving investigators of vital evidence and the probe could be vulnerable to legal challenge on grounds of fairness and human rights.

Lawyers said any criminal investigation launched long after the events under scrutiny was likely to suffer because witness recall would have dimmed and documents might have gone missing or been destroyed. Also, interview evidence obtained in separate official inquiries cannot always be used in criminal probes, as interviewees can argue that their legal obligation to be candid to Government investigators has compromised their right not to incriminate themselves.

Roger Best, partner and fraud specialist at Clifford Chance, the law firm, said the delay in launching the probe was “not ideal”, especially given the time taken by many SFO inquiries.

If a case does take many years to come to court, defendants can try to have it thrown out because of the time lapse – although this argument is less likely to work in fraud cases that are founded largely on documents rather than witness recollection.

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

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